ROANOKE, VA — Advance Auto Parts has reported record sales and earnings for its third quarter, which ended on Oct. 9.
Net sales increased 6.1 percent in the third quarter to $890.2 million from $839.1 million in the same quarter last year. Comparable store sales grew 3 percent in the third quarter. Do-it-yourself (DIY) comparable store sales decreased 0.6 percent and do-it-for-me (DIFM) comparable sales increased 21.4 percent.
Commenting on the third quarter results, Larry Castellani, chairman and CEO, said the company’s results were especially strong in light of the impact of the four major hurricanes that disrupted operations in Florida, the Southeast and the Mid-Atlantic.
“We believe we would have achieved the high end of our guidance range of 3 percent to 4 percent for comparable store sales and 68 to 71 cents for earnings per share without the effects of these hurricanes,” said Castellani.
Gross margin increased 68 basis points to 46.8 percent of net sales in the third quarter from 46.1 percent for the same quarter last year. Selling, general and administrative (SG&A) expenses increased by 48 basis points during the quarter to 36.9 percent of net sales as a result of higher medical costs and the de-leveraging caused by lower sales from the hurricane disruptions. SG&A expenses for the prior year were 36.4 percent of net sales, excluding merger and integration costs associated with the Discount Auto Parts acquisition, and 36.7 percent of net sales on a GAAP basis. Third quarter operating margins rose to 9.9 percent of net sales versus last year’s 9.7 percent of net sales excluding merger and integration costs, and 9.4 percent of net sales on a GAAP basis.
Earnings from continuing operations for the third quarter of 2004 increased to $51.4 million versus comparable earnings from continuing operations of $46.3 million from the same quarter of last year. GAAP earnings from continuing operations were $44.7 million for the same quarter of last year. Earnings per diluted share from continuing operations rose 11.5 percent to 68 cents in the third quarter of 2004 versus comparable earnings per diluted share from continuing operations of 61 cents in the third quarter last year. GAAP earnings per diluted share from continuing operations were 59 cents in the third quarter last year.
The 2003 comparable results are non-GAAP measures because they excluded expenses associated with the Discount Auto Parts’ integration and the early redemption of notes and debentures, as reconciled on the accompanying financial tables. The company used these non-GAAP measures as an indication of earnings from its core operations and believed they were important to the company’s stockholders because of the nature and significance of the excluded expenses.
During the quarter, the company opened 31 new stores, closed two stores and relocated 11 stores, resulting in a total store count of 2,612 stores as of October 9. The company said it anticipates the opening of approximately 125 stores in fiscal year 2004.
Net sales for the first three quarters of 2004 increased to $2.9 billion, or 9.3 percent over the same period in the prior year. Comparable store sales grew 5.1 percent during the first three quarters of this year.
Year-to-date gross margin increased 50 basis points to 46.5 percent of net sales. SG&A expenses were 37.3 percent of net sales for the first three quarters of this year. Comparable SG&A expenses were 37.1 percent of net sales for the prior year, while GAAP SG&A expenses were 37.5 percent of net sales. Year-to-date operating margins rose to 9.2 percent of net sales. Comparable operating margins were 8.9 percent of net sales for the prior year, while GAAP operating margins were 8.6 percent of net sales.
Year-to-date earnings from continuing operations rose to $156 million, an increase of 23.5 percent, versus comparable earnings from continuing operations of $126.2 million for the same period last year. GAAP earnings from continuing operations were $92 million for the same period last year. Earnings per diluted share from continuing operations rose to $2.05, a 20.6 percent increase over last year’s comparable earnings per diluted share from continuing operations of $1.70. GAAP earnings per diluted share from continuing operations were $1.24 for the same period last year.
The company reiterated its fourth quarter earnings guidance of 42 to 46 cents per diluted share. As previously stated, the company said this guidance does not include the costs of replacing its existing credit facility that will approximate 2 cents per diluted share or the positive effects of potential stock buybacks during the fourth quarter. The fourth quarter of 2004 includes 12 weeks compared to 13 weeks in the fourth quarter of 2003. The extra week last year contributed earnings per diluted share of approximately 7 cents. On a GAAP basis, the company anticipates fourth quarter earnings per diluted share to be 40 to 44 cents, including the refinancing costs.
Advance also announced that it has closed on a new $670 million senior credit facility. The company intends to use the proceeds from this new facility to refinance outstanding term loans and the revolver under its existing $495 million facility and to fund potential stock repurchases under its previously authorized stock repurchase program through a new delayed draw term loan. The new facility will also provide for lower effective borrowing rates and increase the capacity of its financed vendor accounts payable program.
For more information about Advance Auto Parts, go to: www.advanceautoparts.com.
_______________________________________
Click here to view the rest of today’s headlines.
